The Government has approved Drax’s development application to install carbon capture technology at Britain’s biggest power station, giving a new lease of life to the North Yorkshire site which provides a significant chunk of Britain’s electricity.

The company will be allowed to install equipment designed to capture the carbon created at the controversial plant, which burns wood pellets to produce electricity.

The former coal power plant was converted to burn wood and other biomass during the 2010s, and burnt its final lump of coal in 2021.

In theory this should create carbon-neutral energy, because the trees and other plants burnt first absorb carbon, then are burnt and release the same carbon back into the atmosphere.

But critics say this assumes that Drax only uses sustainable wood in its boilers. Investigations by the BBC and others have claimed that the company has used wood from environmentally important forests at the plant.

Proponents of the system say that if carbon capture systems are installed at the plant, and if it works as advertised, the Drax plant might go from being an extreme polluter when it used to burn coal to actually absorbing more carbon than it emits.

It would do this by trees absorbing carbon, then being burnt, with the carbon released by burning being captured and likely buried underground rather than being emitted into the atmosphere.

In a decision published on Tuesday, the Government said that its assessors had concluded that “over the whole life of the proposed Development there would be negative GHG (greenhouse gas) emissions due to carbon captured in the operational phase”.

Drax claims that the site could remove around eight million tonnes of carbon dioxide a year when fully operational. That is around 1.6% of the total emissions that the UK produced in 2022.

The Drax site is the largest power plant in the UK and by one measure supplies around 4% of Great Britain’s electricity.

“The … approval is another milestone … and demonstrates both the continued role that Drax Power Station has in delivering UK energy security and the critical role it could have in delivering large-scale carbon dioxide removals to meet Net Zero targets,” said chief executive Will Gardiner.

The announcement comes ahead of the anticipated launch of a Government consultation on extending green subsidies to Drax until 2030 or 2035.

Drax already has a subsidy for its wood-burning up until 2027 but it needs more funding to bridge the gap until its carbon capture operations are running.

But climate campaigners have criticised the decision to grant permissions and are calling on the Government to end Drax subsidies.

Doug Parr, Greenpeace UK’s policy director, said: “The mass-burn of wood pellets in UK power stations is creating a juggernaut of deforestation and extensive land use.

“Households have been forced to prop up Drax’s destructive activity to the tune of over £600 million a year in subsidies for too long and shouldn’t be expected to pay a penny more, especially when the cost-of-living is still sky-high.

“There should be no extension of this subsidy scheme. The Government should just get on with delivering genuinely green energy solutions, like wind, solar and storage, that will actually lower bills, not increase them, and help save, not trash, the planet.”

David Carr, general counsel for the US-based Southern Environmental Law Centre, said: “The UK cannot claim to be a climate leader as long as it is proposing to extend massive subsidies for Drax to burn trees in its North Yorkshire power plant.

“Without the subsidies, the industry would fade away and would pave the way for a clean energy future not dependent on burning expensive and polluting trees.”

Phil MacDonald, chief operating officer at Ember, said: “We’ve already given Drax more than £6 billion in subsidies, and it’s made bills more expensive whilst probably not helping to stop climate change.”

And Katy Brown, bioenergy campaigner at Biofuelwatch, said Drax is “driving forest destruction around the world, contributing to biodiversity loss and harming local communities”.

“The ongoing subsidies Drax is asking for are simply to allow them to carry on burning wood and releasing CO2 into the atmosphere as usual, with the promise of carbon capture some time way off into the future.”

Drax has been contacted for comment.